Oil Price Fundamental Daily Forecast – Chart Pattern Indicates Markets Ripe for Near-Term Correction

U.S. West Texas Intermediate and international-benchmark crude oil reversed earlier gains to close lower on Wednesday. The price action was fueled by a surge in U.S. crude exports to an all-time high and as American drillers pumped near record levels.

December WTI crude oil futures settled at $54.30, down $0.08 or -0.15% and January Brent closed the session at $60.49, down $0.45 or -0.74%.

The Energy Information Administration’s weekly inventories report showed U.S. crude stocks decreased by 2.4 million barrels during the week-ending October 27. That was better than the 1.8 million barrel estimate, but well short of the American Petroleum Institute’s 5.1 million barrel decline reported on Tuesday.

New data showed the United States exported 2.13 million barrels a day of oil in the week through October 27, the first time the nation has crossed the 2 million-barrels-per-day mark.

In other news, total U.S. crude production came in at 9.55 million barrels a day, just short of the September 29 high going back to July 10, 2015.

Forecast

Crude oil futures are trading flat early Thursday. There has been no follow-through to the downside following Wednesday’s potentially bearish closing price reversal top, also known as simply a higher-high and a lower close.

The price action suggests the markets may be ripe for a short-term correction, but not necessarily a change in trend.

We know at this time that traders have built in a premium due to expectations of an extension of the OPEC-led program to cut production. However, with the announcement of the extension not likely to come about until the OPEC meeting on November 30 in Vienna, Austria, this leaves plenty of time to create volatility and a two-sided market.

Essentially, until OPEC meets, were likely to see volatile swings in both directions. The bullish speculators will continue to bet on the extension while the bearish investors will continue to focus on increasing U.S. production and exports.

If yesterday’s reversals represent real selling pressure then were likely to see a pullback in the WTI futures contract to $53.05 over the near-term. The Brent crude oil futures contract has a near-term target of $59.05.